Performance reviews

Tuesday will be my last official day with Rio Tinto. To every one of the many people I have had the pleasure of working with since graduation, thanks for the laughs, education and experiences. I'm moving on with wisdom and excitement shaped by knowing all of you. 

Rio was a brilliant company to work for and like most large organisations, they have all the policies, procedures, benefits, rewards, systems, processes to manage their huge workforce. Note the word 'manage'... Wedging a workforce into the confines of these rules is probably a necessity. There are 1000's to cater for, constantly changing regulatory environments and a vast array of roles. Outside the loving arms of Rio (and most other large organisations)  you start to miss having a rule book to play by. There is one procedure I wont miss though... Not one bit...

Performance reviews...

Even writing the term fills me with unease. Over my career I have given far more reviews than I received. It doesn't matter which side of the table I sit, I find the experience completely disengaging. Here's why:

1. The distribution curve. Doesn't it simply force you to keep a few underachievers on your team? For every poor performing employee, you theoretically (and practically in many cases) are entitled to reward a high achiever? Then you simply tell everyone else that they 'meet expectations' .Great organisations can't afford to hold on to poor performers or demoralise the vast majority who are doing every thing you want (meeting expectations by definition).
2. Studies have shown that organisational and quality improvements are poorly correlated with individual performance assessments. In fact, some studies have shown a detrimental performance in quality . So it begs the question: if individual performance ratings are not positively impacting the bottom line, could there be a more motivating process for engaging employees?
3. Giving someone a number once or twice a year that is completely aligned to their pay rise and bonus promotes an environment of ticking boxes, working to pre-defined KPI's and lacks the creativity and flexibility we actually want from our teams. 
4. Self rating is no-win: If you rate yourself poorly, your leader is likely to leave you low, question your ambition and save some high scores for distribution among the squeaky wheels. If you rate yourself highly, your leader has to spend the whole conversation dredging up work you did not do well to knock you down a few points.
5. They are one sided. Your review depends on the view of your leader. His review depends of the view of his leader and so on. At no stage, does the vast majority of the workforce get to evaluate the performance of their leaders...

Don't get me wrong. I firmly believe in individual accountability. I want to see financial reward for hard work. I just happen to think that there has to be better ways of dealing with the humans in our organisations. So I did some research...

This time last week I had not even heard of a little Australian IT company called Atlassian. From what I have read and seen of this great team, I've become a fan. Their 5 values speak volumes and I get excited about a future where other, larger organisations think like this:

So what did Atlassian do about Performance Reviews?

1. They kept the constructive bits of performance reviews like specific meetings to discuss performance and threw out the un-constructive bits around ratings and distributions curves.
2. They stopped paying performance bonuses and instead pay top market salaries for the brightest and hardest working in their fields. Bonuses are based on the organisations performance.
3. Continuous discussions through the year including 360 degree reviews, long term aspirations, barriers and focus areas.
4. Increased focus on behaviours with two axis ratings on effort and results.

It sounds simple and I sure hope it works. Good luck Atlassian, I like what you are doing and for this years performance score I give you 'Exceeds Expectations'!

For more information on Altassians performance reviews see http://www.managementexchange.com/story/atlassians-big-experiment-performance-reviews